Shares of infrastructure firms such as Punj Lloyd Ltd., Gammon India Ltd., IVRCL Infrastructure & Project have lost between 31% and 62% over the past 12 months while the benchmark Sensex has gained 12.8% over the same period.

Jaiprakash Associates, a construction company with interests in engineering, cement and real estate among other things, has lost 34.2% over the past 12 months. Larsen & Toubro Ltd., the country’s largest engineering and construction company by sales, has done better than most – but still underperformed the Sensex by more than 5% over that period.

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In early afternoon trade on Wednesday, Jaiprakash was 0.8% lower at 85.0 rupees ($1.9) while Larsen & Toubro was up 0.1% at 1,614.50 rupees ($35.7). The Sensex was trading 0.1% higher.

In the past year, infrastructure companies have struggled to find funds and to get their work done.

On the funding side, the paucity of long-term borrowing has been dogging the sector for years. India is increasingly relying on private and overseas investment to develop its infrastructure as it aims to spend $1 trillion between 2012 and 2017 to lay new roads and build new airports. Investments in roads, bridges and power plants are mostly funded through the country’s local savings, which are among the highest in the world, standing at around 35% of GDP.

But infrastructure projects in India have struggled to secure the long-term capital investments they need. Banks have long been reluctant to lend money for more than seven to 10 years, since they say deposits are usually there for less time.

Bureaucratic red-tape, a shallow local bond market and faulty project designs have often thwarted overseas investors from committing money that won’t promise returns in a decade.

Poor infrastructure, which hurts supply chains and distribution networks above all, is widely seen as a threat to the India’s economic growth. This is something government officials are well aware of and infrastructure firms now hope they’ll put money where their mouth is.

The sector is hoping the government will increase its fund allocation to infrastructure from 6% of GDP to between 9% to 10% of GDP, says Angel Broking, a Mumbai-based brokerage.

Another brokerage, ShareKhan, says the government may come up with a suitable model for promoting public sector-private sectors joint ventures as well as some measures to boost foreign investment in infrastructure projects.

Over the past year, infrastructure companies have also had difficulties acquiring land and obtaining environmental clearances for their projects. But these are issues which are unlikely to be tackled in the budget – since they would require changes to existing legislation. But companies in the sector are hoping the government will at least take some measures to ease the flow of funds to the sector.

One of these measures could be more tax breaks on infrastructure bonds. In last year’s budget, the government took measures to encourage retail investors to participate in infrastructure development. This involved allowing non-bank finance companies such as Infrastructure Development Finance Co. and Power Finance Corporation to issue infrastructure bonds with a tax break of 20,000 rupees.

In this year’s budget, there are hopes that the tax break will be expanded to 50,000 rupees, says Angel Broking.

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